Kolkata: The Oberoi family-controlled EIH Associated Hotels Ltd, which runs hotels under the Trident brand, is attracting attention from investors—a UK-based fund Jupiter Asset Management Ltd has raised its stake in the firm to 11%—since Reliance Industries Ltd (RIL) announced a month ago that it had acquired a 14.12% stake in EIH Ltd, the flagship hotel firm of the Oberoi family.

A large section of investors is expecting EIH to eventually make an open offer for the shares of EIH Associated Hotels. The latter’s shares shot up to a 52-week high of Rs250.80 on the Bombay Stock Exchange (BSE) on 6 September, They have since declined, but are trading close to that level.

“If the stake sale to RIL by the Oberoi family results in changes in management control, EIH would have to make an open offer for EIH Associated Hotels, its stake in it being more than 15%," said a member of the takeover panel of the capital market regulator Securities and Exchange Board of India (Sebi).

“However, what would determine change in management control at EIH is the nature of the agreement between RIL and the Oberoi family," he added, speaking on condition of anonymity.

After being among gainers for many days consecutively, EIH Associated Hotels’ shares closed Rs5 or 2.15% lower at Rs228 apiece on BSE on Thursday, while the bourse’s benchmark Sensex index gained 112.78, or 0.57%, to end at 20,069.12 points.

EIH Associated Hotels closed at Rs164.40 on 30 August, the day the Oberoi family announced the share sale to RIL. The announcement was made after stock markets had closed.

In the past month, EIH Associated Hotels’ shares have gained 38%, while EIH’s shares have declined 9% since 30 August. EIH closed at Rs136.45 apiece on the BSE on Thursday.

EIH Associated Hotels was founded 27 years ago to hold properties in which the Oberoi family didn’t have controlling ownership. Over the years, EIH Associated Hotels consolidated its stake in its properties, and the company currently runs eight hotels.

Such is the investor appetite for the illiquid shares of EIH Associated Hotels that BSE put the stock under its so-called trade-to-trade segment from 17 September to discourage speculative transactions. Under the trade-to-trade segment, all transactions are separately settled, which leaves no scope for day trading.

The National Stock Exchange is charging 100% value at risk margin for trades in EIH Associated Hotels’ shares, using another tool to discourage speculative transactions.

EIH refused to offer any comment for this story. RIL said the speculation was baseless.

Jupiter Asset Management also declined to comment. Stock market filings show the firm has scaled up its holding from 4.8% to 11.04% by buying 1.22 million shares of EIH Associated Hotels from the market in the three weeks till 23 September.

Independent equity analyst S.P. Tulsian said if, under the share purchase agreement with the Oberoi family, RIL had got pre-emptive rights or any say in the management of EIH, it would have disclosed this and announced an open offer already.

He, however, maintains that RIL is unlikely to remain a “passive investor" in EIH.

“It is unlikely that RIL would have no say in the management of EIH," said a veteran stockbroker and a former president of the Calcutta Stock Exchange. “If at any point it is established that RIL wields control over the management of EIH, an open offer would have to be made for the shares of EIH Associated Hotels." He refused to be named.

What could make things clearer is EIH’s impending share sale through a rights issue, from which it is looking to raise 1,300 crore. Speculation is rife that the Oberoi family could renounce a part of its entitlement to RIL, allowing it to raise its stake.